[HONG KONG] Hong Kong is probing allegations of insider dealing that involve at least two individuals at the stock exchange and the city’s financial regulator as well as brokers and social media influencers, according to people familiar with the matter.
Authorities are investigating if regulatory staff at Hong Kong Exchanges & Clearing and the Securities and Futures Commission tipped off traders and others to upcoming announcements involving dozens of listed companies over several years, the people said, asking not to be named because they aren’t authorised to divulge the details.
The probes have been ongoing for months, the people said. Such investigations can take years and may not always result in charges.
Some of the announcements that were allegedly leaked involve privatisations, which flourished over the past few years, the people said. The companies themselves aren’t necessarily connected to the probe, the people said.
Unexplained price spikes have long been a source of concern in Hong Kong. The city has previously been rocked by insider scandals and pump and dump probes with colourful names such as the “Nefarious Network.” A 2024 study by Bayes Business School in London showed about 10.26 per cent of deals in Hong Kong were leaked in 2023, making it the third worst market globally, behind South Korea and the US.
An SFC spokesperson said: “It is our policy not to comment on investigations, if any.” The Hong Kong exchange declined to comment.
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Over the past few years some privatisation deals in Hong Kong have shown mysterious price moves. In 2023, shares of IMAX China Holdings surged the most in more than two years just two days before a take-private deal was announced. NWS Holdings shares posted their biggest gain in a year, before news of a buyout offer emerged four days later. There is no indication that these moves are part of the probe.
In a recent speech, SFC chairman Kelvin Wong vowed a “multi-pronged and uncompromising” enforcement approach and an “unyielding fight to uphold the sanctity of our markets.”
For the local securities regulator, insider dealing accounted for 7 per cent of all investigations as of the third quarter of 2024. It’s now pursuing several high-profile cases on alleged insider dealings against a star hedge fund, a local wealthy family and a famous film director.
Both the HKEX and the SFC have previous experience of employee malfeasance. The Independent Commission Against Corruption in 2024 pressed charges against one SFC manager who allegedly made HK$11 million by divulging information on a rights issue.
Another SFC associate director was this year charged with conspiracy to pervert the course of public justice by allegedly providing advice on how to deal with a market manipulation investigation.
Previously, a former co-head of the IPO vetting team at HKEX was acquitted of bribery charges. BLOOMBERG
